Contractor Mortgage Questions

[spartan87]

Hi All

We have recently been offered a first time buyer mortgage from Halifax on a new build (after months of hurdles and 11 months build days). My partner and I are both on the mortgage. She has fulltime job and I acquired the mortgage with a 6 month contract as I am a contractor.

We are likely to be pushed to exchange contracts in January but completion is currently late May 2016.

Because of all the delays, the 6 month contract that I provided as proof of income is coming to an end. Do I need to let the bank know this and get another asap?
Dont want to exchange then be met with checks that could risk the mortgage fallijg through.

Has anyone been in a similar position and if so I'd welcome any feedback. It's very difficult to find any information as all guides and forums are those with full time jobs.

[NibblyPig]

Did you go through a mortgage adviser? They would be best to let you know. I wouldn't approach the bank directly just yet unless you have no choice as they tend to go into CYA-mode as soon as you ask them anything that isn't straightforward.

I thought you needed years of accounts to apply in which case I wouldn't bother saying anything as it's perfectly normal to have periods without income and that's the whole reason they average it over the year.

If you told the bank that your income was X when really it was only X for 6 months and then it would be nothing, then it would likely be mortgage fraud to continue your application.

[Mark McBurney@CMME]

If you used a broker, ask them to check whether the product you're on has an expiry date before your proposed completion date, as Halifax have new build special products with longer expiry dates for this very reason.

[chopper]

Halifax's lending criteria is at
Halifax Intermediaries | Lending criteria | Mortgages

For Contractors
All applicants must have a current continuous employment of 12 months or more with 6 months of the contract remaining
- or -
2 years continuous service (for the last two years as at the date of application) in the same type of employment.

I'm not sure how much bench time you can have before it stops being continuous service - possibly 3 months (When applying to Halifax earlier in the year, SWMBO - who is FTC - didn't meet the standard lending criteria as she'd had 4 months off between end of old job and start of new FTC although it was subsequently approved at manual underwriting)

[northernladuk]

I think you need to read all your paperwork very carefully. I would expect it to say that you are obliged to contact them should your circumstances change during the period of offer. If that's the case I'd say you have to inform them else you'd be possibly committing fraud. I'd they find they've lent youb money when you're change in circumstances drops you out of their lending criteria they ain't going to be happy for obvious reasons.

That said they do understand contractors a lot better now. I don't know what they asked for as evidence but they have to be aware of our transient nature so I really don't think it will be a problem.

[Mark McBurney@CMME]

Halifax's lending criteria is at
Halifax Intermediaries | Lending criteria | Mortgages

For Contractors
All applicants must have a current continuous employment of 12 months or more with 6 months of the contract remaining
- or -
2 years continuous service (for the last two years as at the date of application) in the same type of employment.

I'm not sure how much bench time you can have before it stops being continuous service - possibly 3 months (When applying to Halifax earlier in the year, SWMBO - who is FTC - didn't meet the standard lending criteria as she'd had 4 months off between end of old job and start of new FTC although it was subsequently approved at manual underwriting)

Halifax won't agree anything more than 6 weeks as a gap without a very good reason.

[northernladuk]

Halifax won't agree anything more than 6 weeks as a gap without a very good reason.

And 'It's part and parcel of what we do'isnt good enough lol...

[chopper]

And 'It's part and parcel of what we do'isnt good enough lol...

I suspect from a risk point of view, "I couldn't find a job for 6 weeks" isn't as appealling as "One contract ended and I quickly fell into another one". I imagine if you could show that you went to Australia for 3 months then came back and quickly found another job, that may have more chance of falling into the 'good reason' category more than 'sat on my @rse watching Jeremy Kyle, Homes Under The Hammer and The Chase for 3 months and couldn't find anything'.

I thought Halifax did Day 1 contractors anyway, so surely a greater than 6 week gap is irrelevant as long as you are in contract and have at least six months to go?

[Mark McBurney@CMME]

I suspect from a risk point of view, "I couldn't find a job for 6 weeks" isn't as appealling as "One contract ended and I quickly fell into another one". I imagine if you could show that you went to Australia for 3 months then came back and quickly found another job, that may have more chance of falling into the 'good reason' category more than 'sat on my @rse watching Jeremy Kyle, Homes Under The Hammer and The Chase for 3 months and couldn't find anything'.

I thought Halifax did Day 1 contractors anyway, so surely a greater than 6 week gap is irrelevant as long as you are in contract and have at least six months to go?

No - Halifax still look at the last 12/24 months of working history, so if you've a career break in that time you will still come up against the same problems.

[JohnJizzle]

I just completed a house purchase and buy to let on current property.

I had been contracting less than a year and had 2 months remaining on contract when I started the process - halifax had no issue with this.
BM wanted more info as it got closer to the end date